I don't see this argument making sense. Omega's claim reduces to neglibible chances that a choice of Defection will be advantageous for me, because Omega's claim makes it of neglible probability that either (D,C) or (C, D) will be realized. So I can only choose between the worlds of (C, C) and (D, D). Which means that the Cooperation world is advantageous, and that I should Cooperate.

In contrast, if Omega had claimed that we'd make the opposite decisions, then I'd only have to choose between the worlds of (D, C) or (C, D) -- with the worlds of (C, C) and (D, D) now having negligible probability. In which case, I should, of course, Defect.

The reasons for the correlation between me and Agent X are irrelevant when the fact of their correlation is known.

Agent X is a piece of paper with "Defect" written on it.

Sorry, was this intended as part of the problem statement, like "Omega tells you that agent X is a DefectBot that will play the same as you"? If yes, then ok. But if we don't know what agent X is, then I don't understand why a DefectBot is apriori more probable than a CooperateBot. If they are equally probable, then it cancels out (edit: no it doesn't, it actually makes cooperating a better choice, thx ArisKatsaris). And there's also the case where X is a copy of you, where cooperating does help. So it seems to be a better choice overall.